Verifying lifetime gifts during the administration of an estate

aroominyork

I am co-executor of an estate for which a solicitor is carrying out the administration. A number of large financial gifts were made during the deceased’s lifetime (and during the IHT taper period), with the transfers of funds carried out by the other co-executor who had financial Power of Attorney. My question is where responsibility lies for now verifying that records exist to confirm the gifts were made at the instruction of the donor? Is it with executors, with the solicitor, or does this not constitute part of the process of administering an estate?

Keep_pedalling

Did the testator have the mental capacity to make these ‘gifts’ when they were made?

If not the attorney has gone way beyond their authority in making them. The big question is have the gifts had a negative impact on any of the beneficiaries? If so the attorney could be facing legal action against them. 

aroominyork

Yes, the testator had mental capacity.

My concern is whether the gifts were explicity authorised, and where - if anywhere - responsibility lies for verifying this during the current process.

The negative impact if they were not authorised would be the reduced amount available for distribution to the residutary beneficiries.

Keep_pedalling

aroominyork said:

Yes, the testator had mental capacity.

My concern is whether the gifts were explicity authorised, and where - if anywhere - responsibility lies for verifying this during the current process.

The negative impact if they were not authorised would be the reduced amount available for distribution to the residutary beneficiries.

Very difficult as the only person who could do so has died.

Brie

Have you asked the other executor for proof?  Or is there an issue due to where the payments were made?

aroominyork

Keep_pedalling said:

aroominyork said:

Yes, the testator had mental capacity.

My concern is whether the gifts were explicity authorised, and where - if anywhere - responsibility lies for verifying this during the current process.

The negative impact if they were not authorised would be the reduced amount available for distribution to the residutary beneficiries.

Very difficult as the only person who could do so has died.

Brie said:

Have you asked the other executor for proof?  Or is there an issue due to where the payments were made?

Yes, the donor has died, but would the person making payments under PoA be expected to have obtained and kept the donor's written authorisation for the gifts? I do not want to go into too much detail, but the gifts were made to the Attorney/Co-executor’s children. So it is tricky, hence my wanting to know if there is a legal responsibility on myself and/or the solicitor to verify the testator’s wishes before I ask any questions.

Keep_pedalling

aroominyork said:

I Keep_pedalling said:

aroominyork said:

Yes, the testator had mental capacity.

My concern is whether the gifts were explicity authorised, and where - if anywhere - responsibility lies for verifying this during the current process.

The negative impact if they were not authorised would be the reduced amount available for distribution to the residutary beneficiries.

Very difficult as the only person who could do so has died.

Brie said:

Have you asked the other executor for proof?  Or is there an issue due to where the payments were made?

Yes, the donor has died, but would the person making payments under PoA be expected to have obtained and kept the donor's written authorisation for the gifts? I do not want to go into too much detail, but the gifts were made to the Attorney/Co-executor’s children. So it is tricky, hence my wanting to know if there is a legal responsibility on myself and/or the solicitor to verify the testator’s wishes before I ask any questions.

The gifts really should have been documented by the donor, as it leaves the attorney open to accusations of abusing their authority. This leaves you between a rock and a hard place, especially if your co-executor is a sibling. I would be taking legal advice in your shoes.

getmore4less

If the donor had capacity then they are responsible for managing their financial affairs.

Do you have any evidence the donor was unaware of the transactions?


To make use of any taper they would have to have been very large gifts as the relief applies to the tax not the gift and only large gifts are taxable. 

aroominyork

Keep_pedalling said:

aroominyork said:

I Keep_pedalling said:

aroominyork said:

Yes, the testator had mental capacity.

My concern is whether the gifts were explicity authorised, and where - if anywhere - responsibility lies for verifying this during the current process.

The negative impact if they were not authorised would be the reduced amount available for distribution to the residutary beneficiries.

Very difficult as the only person who could do so has died.

Brie said:

Have you asked the other executor for proof?  Or is there an issue due to where the payments were made?

Yes, the donor has died, but would the person making payments under PoA be expected to have obtained and kept the donor's written authorisation for the gifts? I do not want to go into too much detail, but the gifts were made to the Attorney/Co-executor’s children. So it is tricky, hence my wanting to know if there is a legal responsibility on myself and/or the solicitor to verify the testator’s wishes before I ask any questions.

The gifts really should have been documented by the donor, as it leaves the attorney open to accusations of abusing their authority.

Presumably it would it be the attorney's, rather than the donor’s, responsibility to ensure the gifts were documented?

I need to get hold of the PoA because there was a second attorney, the donor’s accountant, and if the two attorneys had joint – rather than joint and several – powers, then the trail proving the donor’s authority should be crystal clear.

getmore4less said:

If the donor had capacity then they are responsible for managing their financial affairs.

Do you have any evidence the donor was unaware of the transactions?


To make use of any taper they would have to have been very large gifts as the relief applies to the tax not the gift and only large gifts are taxable. 

i) The donor had moved into a care home and, whilst having capacity to make decisions, was no longer able to process transactions (he no longer used a computer) so the attorney managed all his financial transactions.

ii) I do not have evidence either way. I want to ensure the donor’s wishes were followed.

iii) The inheritance tax annual exemption under PoA is £3000. I believe that anything over this is liable for IHT, tapered if made within the previous seven years. The amounts in question here are six figures.

getmore4less

The donor should have still been checking the accounts and statements regularly.

To qualify for taper they would need to be in excess of £325k the problem is gifts use up nil rate band oldest first.

aroominyork

getmore4less said:

The donor should have still been checking the accounts and statements regularly.

The donor had had a stroke. He had capacity to make decisions about gifts but not to review his financial statements.

getmore4less said:

To qualify for taper they would need to be in excess of £325k the problem is gifts use up nil rate band oldest first.

You are confusing the IHT threshold with the annual gifting exemption limit.